Sensex, Nifty this week: From trade data to retail inflation, factors that may drive Dalal Street

Last week, the Indian equity markets experienced bearishness during the last two trading sessions as domestic inflation concerns and the rating downgrade of small and mid-sized banks in the US dented investors' sentiments. This week, traders will be eyeing macro data such as retail (CPI) and wholesale (WPI) inflation, trade balance, and industrial production in the US. Besides this, the market will be looking at Q1 earnings from companies such as Divi's Laboratories, Vodafone Idea, ITC, Gensol Engineering, GMR Airports Infrastructure, etc.

 Economic events: On the economy front, investors will be eyeing the WPI data, which is scheduled to be released on Monday (August 14). India's wholesale prices fell by 4.12 per cent year-on-year in June, compared with market estimates of a 3.6 per cent, following a 3.48 per cent decline in the prior month. On the same day, CPI data will also be released. India's annual consumer inflation rate accelerated for the first time in five months to 4.81 per cent in June of 2023 from an upwardly revised 4.31 per cent in May, and above market forecasts of 4.58 per cent.

The stock market will remain closed on Tuesday, August 15, 2023, on account of Independence Day. On the same day, India’s imports and exports data would be released. The merchandise trade deficit narrowed to $20.13 billion in June 2023 from $22.07 billion in the same month of the previous year.

Quarterly Results: In the final phase of the current earnings season, companies such as Divi's Laboratories, Vodafone Idea, ITC, Gensol Engineering, GMR Airports Infrastructure, Indiabulls Housing Finance, Uflex, BCPL Railway Infrastructure, Wockhardt, etc. will be announcing their numbers during the week.

US market data: On the global front, investors would be eyeing key economic data in the US, starting with Consumer Inflation Expectations on August 14, Retail Sales, Imports and Exports, Redbook on August 15, Industrial Production, Manufacturing Production, FOMC Minutes on August 16, Initial Jobless Claims on August 17 and Baker Hughes Total Rig Count on August 18.

Market Outlook: Deepak Jasani, Head of Retail Research at HDFC Securities, said Nifty fell for the second consecutive session on August 11, pulled down by weak global cues. European and Asian stocks fell on Friday as traders closed out a week marred by geopolitical tensions between China and the US and softer economic data that dented valuations in China. Hawkish language from a US central banker also put traders in a risk-off mood.

On a weekly basis, Jasani added, Nifty fell for the third consecutive week falling 0.45 per cent. "As the Q1 results season has come to an end, we could see a broad-based profit taking in the markets even as the global cues are also not helping currently. 19,300 could be the next support for Nifty while 19,645 could now prove to be a resistance. A breach of 19,300 could take the Nifty to 18,887 over the next few weeks."

Bank Nifty: Kunal Shah, Senior Technical & Derivative analyst at LKP Securities, said that the Bank Nifty index is currently dominated by bears, as evidenced by the breach of the crucial support level at 44,400 on a closing basis. "The prevailing sentiment seems to lean towards selling on rallies, with an immediate resistance level observed around 44,500. Looking ahead, the index's next significant support is positioned at 43,700, which might serve as a buying zone for the bulls, potentially triggering a bounce back," Shah said.